Jewett-Cameron's Q4 2025 Earnings Call: Contradictions Revealed on Price Adjustments, Metal Fence Focus, Asset Sales Timeline, Strategic Financing, and Lumber Strategy

Date of Call: December 1, 2025

Financials Results

• Revenue: $41.3M for FY2025, down $5.8M YOY (from $47.1M in FY2024); Q4 revenue $10.4M vs $13.2M prior-year Q4
• Gross Margin: FY2025 gross margin 15.1% vs 18.8% in FY2024; Q4 gross margin 8.2% vs 14.5% prior-year Q4

Guidance:

• Reduce operating expenses by approximately $1M–$3M annually to align OPEX with gross profit
• Focus operations and resources on core metal fence business and expand retail placements
• Monetize noncore assets (seed cleaning property listed at $7.223M; innovation studio listed at $795K)
• Sell excess pet inventory and pursue purchase of excess lumber inventory discussions with customers/third parties
• Pursue strategic financing and increase Northrim credit line capacity
• Target exiting FY2026 with improved financial position and operating profitability

Business Commentary:

* Impact of Tariffs on Sales and Profitability: - Jewett-Cameron Trading Company's total revenue for fiscal 2025 was $41.3 million, down 5.8 million compared to the previous year. - This decline was primarily due to the impact of tariffs, which resulted in deferring retailer purchases and increasing costs, significantly affecting the second half of the fiscal year.

• Metal Fence Business Performance:
• Despite the challenges, the metal fence business remained essentially flat compared to the previous year.

• The stability of this segment was attributed to the company's innovative products and strong retail presence, which maintained their growth trajectory post-pandemic.

• Operational Adjustments and Cost Reduction:
• Jewett-Cameron implemented an overall headcount reduction of 27% year-over-year to realign its workforce and reduce operating expenses.

• This was in response to addressing the tariff-induced market turmoil and focusing on core operations for long-term profitability.

• Pet Product Inventory Challenges:

• The company's pet product business saw a decline to $4.3 million compared to $7.6 million last year.

• The decrease was due to overall weakness in the pet market, leading to excess inventory and a strain on working capital.

• Asset Sales and Strategic Realignment:

• Jewett-Cameron is reviewing potential transactions for its noncore assets, including its seed cleaning property and innovation studio.
• These strategic considerations are aimed at monetizing noncore assets, improving liquidity, and focusing on core metal fence products for long-term growth.

Sentiment Analysis:

Overall Tone: Negative

• Management cited significant tariff-driven disruption: "total revenue was $41.3 million, down $5.8 million" and "net loss for the year was $4.1 million compared to $722,000 net income last year." They noted margin compression: "gross profit margins for the year were 15.1% compared to 18.8% in fiscal 2024," and described tariff impacts that "significantly impacted our second half results."

Q&A:

• Question from Robert Blum (Lytham Partners, LLC): Yes, Chad, there's a couple of questions here. First off, can you provide maybe some more details about the customer slow adoption of your price adjustments? Anything you can expand upon there?
  Response: Customers must consent to price increases—approvals often take 30–90+ days—and frequent tariff changes made previously set price adjustments obsolete, preventing timely recovery of higher costs.

• Question from Robert Blum (Lytham Partners, LLC): All right. The next question here is, maybe you can discuss why your lumber customer decided to move forward without you.
  Response: The consignment model compressed cash flow and margins and tied up capital; the customer appears to be following a different long-term supply strategy, which should reduce JC's inventory burden.

• Question from Robert Blum (Lytham Partners, LLC): All right. Maybe you could expand on your decision to focus on the metal fence business as sort of the go-forward strategy here.
  Response: Metal fence is higher-margin and differentiated (e.g., Adjust‑A‑Gate), held steady through tariffs, and management sees scalable retail expansion and channel opportunities.

• Question from Robert Blum (Lytham Partners, LLC): All right. Thank you for that, Chad. Maybe we could talk a little bit about the time line for any asset sales.
  Response: No timeline; only preliminary discussions are underway and the company will disclose details if/when definitive agreements are reached.

• Question from Robert Blum (Lytham Partners, LLC): All right. There's a couple of additional questions here. Maybe we could expand a little bit on the increase in the credit line usage from $2 million to $4 million. Is there anything that could be expanded upon there?
  Response: Borrowings increased to fund operations and strategic initiatives amid seasonality and slower inventory movement; the company is pursuing additional financing and seeking to raise the credit line cap.

• Question from Robert Blum (Lytham Partners, LLC): All right. Very good. Next question here is specifically as it relates to collateral for the Northrim line of credit. Is there anything you can expand upon there on what specifically is the collateral?
  Response: The Northrim facility is structured via sale/factoring of accounts receivable and advances secured by current inventory.

• Question from Robert Blum (Lytham Partners, LLC): All right. Very good. Maybe you could discuss what range of cash do you estimate freeing up in the next 6 months from pet product liquidation and excess lumber inventory to the extent that you're able to provide any details on any of that?
  Response: No estimate provided; management said they cannot disclose beyond filings and cannot guarantee liquidation proceeds, but are motivated to monetize inventory and will report results later.

Contradiction Point 1

Customer Adoption of Price Adjustments

It directly impacts expectations regarding the company's ability to pass on cost increases to customers, which could affect profitability and cash flow.

Can you explain customers' slow adoption of your price adjustments? - Robert Blum (Lytham Partners, LLC)

2025Q4: Our customer relationships require consent for any price increase. Customers may negotiate lower price increases or not accept changes immediately, leading to a delay in passing higher costs from tariffs and global trade disruption to them. - Chad Summers(CEO)

Can you discuss your roadmap execution, including Ultra's 2024 launch and the Rubin transition in 2026, given supply constraints? - Toshiya Hari (Goldman Sachs)

2025Q1: Our customers have all said yes to the increases, and they're being implemented as we speak. And so, we'll see a significant increase in the gross margins as the year progresses, especially in the back half. - Chad Summers(CEO)

Contradiction Point 2

Focus on Metal Fence Business

It involves the company's strategic focus on metal fence products, which impacts its product portfolio and market positioning.

Can you clarify the rationale for focusing on the metal fence business as your long-term strategy? - Robert Blum (Lytham Partners, LLC)

2025Q4: Metal fence products represent our innovative strengths, offering unique solutions for pros and do-it-yourselfers. These products grew post-pandemic and held steady during tariffs. We see room for growth through expanding into thousands of stores and new channels. - Chad Summers(CEO)

What changes in the Blackwell GPU and how will they affect revenue and customer reactions? - Vivek Arya (Bank of America Securities)

2025Q1: We're still pursuing everything that's been outlined. We think that our business model is strong and allows us to do that even though there's a lot of emphasis on the metal fence products. - Chad Summers(CEO)

Contradiction Point 3

Asset Sales Timeline

It demonstrates differing degrees of transparency and commitment to property sales, which could impact investor confidence and strategic decision-making.

What is the timeline for potential asset sales? - Robert Blum(Lytham Partners, LLC)

2025Q4: We are in preliminary discussions, and we will provide disclosures if definitive arrangements are made. - Chad Summers(CEO)

Status of the property for sale? - Robert Blum(Lithium Partners)

2025Q3: We have been actively marketing the property for some time. We will provide information if a definitive arrangement is secured. - Chad Summers(CEO)

Contradiction Point 4

Strategic Financing and Cash Flow Management

It involves differing explanations for strategic financing decisions and their impact on cash flow, which are crucial for financial planning and investor confidence.

What is the timeline for asset sales? - Robert Blum(Lytham Partners, LLC)

2025Q4: We are in preliminary discussions, and we will provide disclosures if definitive arrangements are made. - Chad Summers(CEO)

Can you explain the increase in credit line usage from $2 million to $4 million? - Robert Blum

2025Q2: We are pursuing strategic financing to support our reformulated business strategy, ensuring operational capacity amidst global economic volatility. - Mitch Van Domelen(CFO)

Contradiction Point 5

Lumber Business Strategy and Performance

It reveals varying perspectives on the strategic importance and performance of the lumber business, which could influence strategic decisions and investor expectations.

Why did your lumber customer decide to move forward without you? - Robert Blum(Lytham Partners, LLC)

2025Q4: The consignment model slowed our cash flow and reduced margins, demanding additional resources. The customer's decision aligns with their long-term strategic direction for the category, allowing us to reduce inventory burdens and focus more on metal fence products. - Chad Summers(CEO)

Can you discuss the inventory adjustment at the end of the quarter? - Robert Blum

2025Q2: In terms of lumber, we have seen a stronger than expected demand from large customers, and a strong demand for pressure-treated lumber. The majority of this growth is coming from larger customers and some additional volume from smaller accounts. - Chad Summers(CEO)